...promissory notes, drafts, checks, and certificates of deposit. The most fundamental type of commercial paper is a promissory note, a written pledge to pay money. A promissory note is a two-party paper. The maker is the individual who promises to pay while the payee or holder is the person to whom payment is promised. The payee can be either a specifically named individual or merely the bearer of the instrument who has it in his or her physical possession when he or she seeks to be paid according to its terms. A note payable to "bearer" can be paid to the person who presents it for remuneration. Such an instrument is said to be bearer paper. A promissory note that is payable on demand can be redeemed by the payee at any time, whereas a time note has a date for payment on its face that establishes the date when the holder will have an enforceable right to receive payment under it. There is no obligation to pay a time note until the date designated on its face. The ordinary purpose of a promissory note is to borrow money. Promissory notes should not be confused with credit or loan agreements, which are separate instruments that are usually signed at the same time as promissory notes, but which merely describe the terms of the transactions. A promissory note serves as documentary evidence of a debt. It can be endorsed and sold at a discount to other parties, and each subsequent endorser becomes secondarily liable for the amount specified on the face of the instrument. A number of...
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...Finance Organization and Long-Term Planning Introduction Sensible Essentials, after considering the Genesis Corporation aggressive growth plan, suggested that Genesis should consider broadening their financing to consider long-term financing beyond just short-term financing. The organization has provided the potential costs and benefits of each long-term option available. Long-Term Financing A company needs long-term financing if they want to expand their business as Genesis is planning by starting operations in Europe and Asia. Sources of long-term financing include shares that are issued to the public and these holders are considered the owners of the business. There are two types of shares – equity and preference. The advantages of equity capital is no fixed maturity, no obligation to redeem, no compulsion to pay dividends, provides leverage capacity, and dividends tax exempt for investors. The disadvantages of equity capital are dilution of control of existing owners, high cost – rate of return expected by the equity holders higher than debt holders, dividends are not tax deductible, issue cost are higher due to underwriting, brokerage, and other issue expenses, along with higher servicing costs including post annual reports (Fedorov, 2012). Preference capital advantages are no obligation to pay dividend, no bankruptcy or legal action for non payment, financial distress of redemption obligation not very high, part of net worth which hence increases its creditworthiness/leverage...
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...XXXX.(the “Lender”), the principal sum of $XXXXX, together with interest thereon from the date of this Note. Interest shall accrue at a rate of six percent (X%) per annum, compounded annually. Unless earlier converted into Conversion Shares pursuant to Section 2.2 of that certain Note Purchase Agreement dated XXXX among the Company, Lender and certain other investors (the “Purchase Agreement”), the principal and accrued interest shall be due and payable by the Company on demand by the Majority Note Holders at any time after the Maturity Date. This Note is one of a series of Notes issued pursuant to the Purchase Agreement, and capitalized terms not defined herein shall have the meaning set forth in the Purchase Agreement. 1. Payment. All payments shall be made in lawful money of the United States of America at the principal office of the Company, or at such other place as the holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to Costs (as defined below), if any, then to accrued interest due and payable and any remainder applied to principal. Prepayment of principal, together with accrued interest, may not be made without the written consent of the Lender....
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..._______________________ HOLDERS IN DUE COURSE I. ACQUIRING HOLDER IN DUE COURSE STATUS If you remember the rule that a holder in due course takes free of most of the defenses the parties to the original transaction have against one another, it is easy to see why it is important to determine if the person currently possessing the instrument qualifies as a holder in due course. The basic definition is found in §3-302(a), which you should read carefully. Official Comment 4 to §3-302 makes it clear that the payee can qualify as a holder in due course in some rare situations. Normally, the payee is so involved in the underlying transaction that he or she has notice of problems affecting payment obligations, and thus cannot be a holder in due course. But the examples given in Official Comment 4 describe fact patterns where the payee is innocent of such knowledge and can therefore qualify for the protection given to holders in due course. See also Eldon’s Super Fresh Stores, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 296 Minn. 130, 207 N.W.2d 282, 12 U.C.C. Rep. Serv. 490 (1973), for an example of the payee as a holder in due course. 35 36 3. Holders in Due Course Subsection (c) gives a list of extraordinary transactions — creditors seizing instruments by judicial process, the sale of an inventoried business (a ‘‘bulk transaction’’), or the appointment of the administrator of an estate containing negotiable instruments — in which the transferee is statutorily denied holder in due course...
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...Assignment on Negotiable Instrument Course Title: Legal Environment of International Business Prepared by: Farha Fatema Date of Submission: 28/04/2011 Executive Summary Negotiable instruments are written orders or unconditional promises to pay a fixed sum of money on demand or at a certain time. Promissory notes, bills of exchange, checks, drafts, and certificates of deposit are all examples of negotiable instruments. Negotiable instruments may be transferred from one person to another, who is known as a holder in due course. Upon transfer, also called negotiation of the instrument, the holder in due course obtains full legal title to the instrument. Negotiable instruments may be transferred by delivery or by endorsement and delivery. One type of negotiable instrument, called a promissory note, involves only two parties, the maker of the note and the payee, or the party to whom the note is payable. With a promissory note, the maker promises to pay a certain amount to the payee. Another type of negotiable instrument, called a bill of exchange, involves three parties. The party who drafts the bill of exchange is known as the drawer. The party who is called on to make payment is known as the drawee, and the party to whom payment is to be made is known as the payee. A check is an example of a bill of exchange, where the individual or business writing the check is the drawer, the bank is the drawee, and the person or business...
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...Ninth Edition CPA Preparatory Program Regulation Negotiable Instruments Sample Brian Hock, CMA, CIA with Dave Fairchild, CPA, CMA HOCK international, LLC P.O. Box 204 Oxford, Ohio 45056 (866) 807-HOCK or (866) 807-4625 (281) 652-5768 www.hockinternational.com cma@hockinternational.com Published August 2011 Acknowledgements Material from Uniform CPA Examination, Selected Questions and Unofficial Answers, Copyright © 1990-2011 by the American Institute of Certified Public Accountants, Inc., is reprinted and/or adapted with permission. Acknowledgement is due to the Institute of Certified Management Accountants for permission to use questions and problems from past CMA Exams. The questions and unofficial answers are copyrighted by the Certified Institute of Management Accountants and have been used here with their permission. © 2011 HOCK international, LLC No part of this work may be used, transmitted, reproduced or sold in any form or by any means without prior written permission from HOCK international, LLC. Thanks The author would like to thank the following people for their assistance in the production of this material: Kevin Hock for his work in the formatting and layout of the material, Lynn Roden, CMA for her assistance in the technical elements of the material, All of the staff of HOCK Training and HOCK international for their patience in the multiple revisions of the material, The students of HOCK Training in all of our classrooms and...
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...summarize what they are, how they’re involved, and any other key facts to know as well. 1. Stark LLP is a car manufacturer (Enterprise #1) and Baratheon Inc. is an electric car development technology company (Enterprise #2) 2. The two enterprises jointly formed Lannister (the Entity) to produce electric cars for the mass market and collaborate with government mandates towards the auto industry 3. In terms of ownership towards Lannister: Start has 60% and Baratheon has 40% 4. Lannister’s Board of Directors is composed equally by the two enterprises with four members (two from Stark and two from Baratheon) 5. The two enterprises financed Lannister with 30% equity and 70% bank debt 6. Stark’s 60% is supposedly composed of 18% equity and 42% debt and Baratheon’s 40% is supposedly composed of 12% equity and 28% debt 7. Baratheon received a loan from Stark through Targaryen Financial who required that Stark through the loan guarantee Lannister’s debt to cover Baratheon’s equity interest First, let’s be sure we clarify what things qualify as variable interests due to possibility of consolidating the entity (Lannister) as a variable interest entity. There are particularly four favorite types of variable interests in section of ASC 810-10: 1) Equity, 2) Debt, 3) Guarantees, and 4) Options. However, paragraph 22 of section 55 clarifies how only equity that is at risk falls under the classification of a variable interests. Thus, not all possible equity is a variable for...
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...A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, with the payer named on the document. More specifically, it is a document contemplated by or consisting of a contract, which promises the payment of money without condition, which may be paid either on demand or at a future date. The term can have different meanings, depending on what law is being applied and what country it is used in and what context it is used in. Examples of negotiable instruments include promissory notes, bills of exchange, banknotes, and cheques. Because money is promised to be paid, the instrument itself can be used by the holder in due course as a store of value. The instrument may be transferred to a third party; it is the holder of the instrument who will ultimately get paid by the payer on the instrument. Transfers can happen at less than the face value of the instrument and this is known as discounting; this may happen for example if there is doubt about the payer's ability to pay. Common prototypes of bills of exchanges and promissory notes originated in China. There, in the 8th century during the reign of the Tang Dynasty they used special instruments called feitsyan for the safe transfer of money over long distances.[1] Later such document for money transfer used by Arab merchants, who had used the prototypes of bills of exchange – suftadja and hawala in 10–13th centuries, then such prototypes had been used by Italian...
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...Harvard Business School 9-899-097 Rev. November 19, 1998 Walnut Venture Associates (D): RBS Deal Terms It was Friday, June 5, 1998, and Bob O’Connor was headed home for the weekend. He knew it would be a busy one, for he had many decisions to make. He had been trying to raise capital for his Company – the RBS Group, a software firm – for almost a year. He felt like he was finally nearing the end of this process, but now more issues had arisen. First, his prospective investors wanted to increase the amount of their investment. While he would be happy to have the extra money, he felt that the valuation on RBS was already lower than he had hoped, and he was reluctant to take more money at this price. Second, he had received a draft term sheet the day before. He’d only had a few minutes to scan it, but it seemed a long way from the simple deal they’d discussed weeks before. O’Connor knew he would be spending a lot of time with this document over the coming weekend. Background Wagner and other “angels” from the Walnut group had successfully gotten over several of the issues that had arisen during their due diligence process. (See Walnut Ventures Associates (A), (B) and (C) Nos.899-062, 063 and 064) Wagner described those issues and the due diligence process: The customer feedback was all quite good. O’Connor was a great salesman. The issue was: Is he a one man band? And we decided – yes, he was a one man band, but more by necessity than by choice. After watching him in...
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...a contract, which (1) warrants the payment of money, the promise of or order for conveyance of which is unconditional; (2) specifies or describes the payee, who is designated on and memorialized by the instrument; and (3) is capable of change through transfer by valid negotiation of the instrument. As payment of money is promised subsequently, the instrument itself can be used by the holder in due course as a store of value; although, instruments can be transferred for amounts in contractual exchange that are less than the instrument’s face value (known as “discounting”). Types of Negotiable instruments a) Promissory note: A written, dated and signed two-party instrument containing an unconditional promise by the maker to pay a definite sum of money to a payee on demand or at specified future date. b) Bill of exchange: Bills of exchange are financial documents that require the individual or business that is addressed in the document to pay a specified amount of money on a date that is cited within the text of the document. c) Cheque: A bill of exchange drawn on a bank by the holder of a current account; payable into a bank account, if crossed, or on demand, if uncrossed. Characteristics of Negotiable Instrument The following...
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...American National University | REAL DEFENSE | A Course of Action Against A Holder in Due Course | Marcus Bozeman 2-23-2016 | REAL DEFENSE A Couse of Action against the Holder in Due Course Defenses available against a Holder In Due course are Real Defenses. A Real Defense also known as a Universal Defense is a defense that can be used against any including a holder in due course. The understanding of what a real defense is not related to a transactions merits but actually to its nature as a legal act. The holder in due course is meant to be unaffected by any defenses between the immediate parties, real defense run counter to the considerations of the holder in due course and pressures the negotiable principle to yield. Real defenses include infancy and mental incompetence, illegality, duress, fraud as to the essential nature of the transaction, bankruptcy, unauthorized signature, and alteration (Brown & Sukys, 2013). These are the most common Real Defenses. The requirement to pay an instrument does not exist if there is a real defense. Infancy and mental incompetence also known as Incapacity is built around the fact that a given individual may not have the authority to negotiate an instrument, even if they believe that they know what they are doing. That person may be a minor who by law can’t enter into contract and be held responsible or someone that is mentally incompetent and legally not able to enter into enforceable contracts. Illegality, means...
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...Understanding Letter of Credit EXM104 FA Export Documentation & Methods of Payment Instructor: Emiliano Introcaso Seneca College ASSIGNMENT 02 Xueyuan Tan 041-806-084 Xtan9@learn.senecac.on.ca Due Date August 2nd 2011 – Week 9 Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade. There are basically two types: commercial and standby. The commercial letter of credit is the primary payment mechanism for a transaction, whereas the standby letter of credit is a secondary payment mechanism. Commercial letters of credit have been used for centuries to facilitate payment in international trade. Their use will continue to increase as the global economy evolves. Letters of credit used in international transactions are governed by the International Chamber of Commerce Uniform Customs and Practice for Documentary Credits. The general provisions and definitions of the International Chamber of Commerce are binding on all parties. Domestic collections in the United States are governed by the Uniform Commercial Code. A commercial letter of credit is a contractual agreement between a bank, known as the issuing bank, on behalf of one of its customers, authorizing another bank, known as the advising or confirming bank, to make payment to the beneficiary. The issuing bank, on the request of its customer, opens the letter of credit. The issuing bank makes a commitment to honor drawings...
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...• In other cases, the names of the debenture trustees must be stated in the prospectus and DRR will be created in accordance with guidelines laid down by SEBI. • The trust deed shall be executed within six months of the closure of the issue. • Any conversion in part or whole of the debenture will be optional at the hands of the debenture holder, if the conversion takes place at or after 18 months from the date of allotment, but before 36 months. • In case of NCDs/ PCDs credit rating is compulsory where maturity exceeds 18 months. • Premium amount at the time of conversion for the PCD, redemption amount, period of maturity, yield on redemption for the PCDs/NCDs shall be indicated in the prospectus. • The discount on the non-convertible portion of the PCD in case they are traded and procedure for their purchase on spot trading basis must be disclosed in the prospectus. • In case, the non-convertible portions of PCD/NCD are to be rolled over, a compulsory option should be given to those debenture holders who want to withdraw and en-cash from the debenture program. • Roll over shall be done only in cases where debenture holders have sent their positive...
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...also provides valuable information about the international market. If you want to set up a business for exporting products abroad or importing products from foreign countries for sale in our country, EXIM bank can provide you the required support and assistance. SIDBI: Small Industries Development Bank of India. This bank provides loans to set up the smallscale business unit / industry. SIDBI also finances, promotes and develops small-scale industries whereas IDBI (Industrial Development Bank of India) gives loans to big industries. Gr Commercial Banks: Normal banks are known as commercial banks, their main function is to accept deposits from the customer and on the basis of that they grant loans. (Loans could be short-term, mediumterm and long-term loans.) Commercial banks are further classified into three types. Page 2 8A m bit Those banks which are meant for special purposes. For examples: NABARD, EXIM bank, SIDBI, IDBI. ion Central Bank: As its name signifies, a bank which manages and regulates the banking system of a particular country. It provides guidance to other banks whenever they face any problem (that is why the Central Bank is also known as a banker’s bank) and maintains...
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...NEGOTIABLE INSTRUMENTS LAW (Act No. 2031) PRELIMINARIES Definitions/Distinctions: Negotiable Instrument- A written contract for the payment of money which is intended as a substitute for money and passes from one person to another as money, in such a manner as to give a holder in due course the right to hold the instrument free from defenses available to prior parties. (Sundiang, Reviewer on Commercial Law, p. 80, Third Edition 2006) Promissory Note- An unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer. (Sec. 184, Negotiable Instruments Law [NIL]) Initial parties: a. Maker b. Payee Bill of Exchange- An unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. (Sec. 126, NIL) Initial parties: a. Drawer b. Drawee c. Payee Check- A bill of exchange drawn on a bank payable on demand. (Sec. 185, NIL) Initial parties: a. Drawer b. Drawee c. Payee *As to distinctions between a bill of exchange and a check, please see discussion of Prof. De Leon in Sec. 185. Characteristics: 1. Negotiability 2. Accumulation of Secondary Contracts FORM OF A NEGOTIABLE INSTRUMENT Section 1. Form of negotiable instruments...
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